Global Methanol Market Snapshot

Methanol is one of the largest petrochemical markets by volume and has become a feedstock for two of the other key petrochemical building blocks; ethylene and propylene an end-use that has only been in commercial operation since 2010. 

The methanol industry has transformed itself over the last 15 years, and methanol is becoming an ever more versatile and important molecule.  The use of methanol can be divided into two categories: chemical-related and fuel-related applications.  In 2005, chemical derivatives (acetic acid, formaldehyde, and others) accounted for almost all methanol demand.  Nearly two decades later, chemical derivatives comprise 80 percent of methanol demand as fuel end uses (e.g., MTBE, gasoline blending, biodiesel, and DME), represent the remainder of methanol consumption.  More than one-third of the demand in methanol-to-olefins is captive in coal-to-olefins plants, so it is not “seen” in the methanol market.  Overall, the growth in chemical derivatives and new fuel uses are more than matching the effect of reduced MTBE demand.

Methanol’s importance, but also its simplicity as a one carbon molecule, makes it a prime target for more sustainable production processes.  Sustainable methanol development has so far been primarily driven by increasing demand for low carbon fuels, and developing environmental regulations.

There are three broad routes to make methanol production more sustainable:

• Bio-methanol involves harnessing biomass feedstocks, such as agricultural waste, forestry residues or landfill garbage to produce methanol.  The feedstock is initially gasified to produce a syngas which is then converted into methanol via a methanol synthesis loop and purified via distillation.
• E-methanol involves harnessing wind, solar or hydro power to produce hydrogen via the electrolysis of water.  This can then be reacted with a carbon source, such as captured carbon dioxide, to produce methanol.
• Blue methanol involves the production of methanol using natural gas via traditional routes, with the addition of a carbon capture unit in the plant.  Any waste carbon dioxide must then be sequestered.

The successful scaling up of green methanol production could introduce a new era of demand applications.  This sustainable alternative has the potential to replace current fossil fuel applications, particularly in industries seeking to decarbonise.  Even before green methanol achieves widespread commercial success, small-scale applications are already exploring its use to offer lower emission alternatives.

Some of the most promising applications include:

• Marine fuel
• Heating
• Fuel Cells

Global methanol demand increased to 126 million tons in 2023 as lower inflation rates promoted increased activity in key end sectors such as the automotive industry, while growth in construction was more muted.  In China, the world’s largest region,  methanol operating rates and margins were sluggish in the opening months of the year due to poor consumer confidence amid falling coal prices along with increasing import quantity.  However, by the second half of the year methanol margins, operating rates and downstream demand improved while coal prices stabilized backed by strong demand from power generation. 

Capacity continues to be added with global capacity reaching just short of 170 million tons per year in 2023; an additional ten million tons per year will be added by the end of 2024.  Recent growth in capacity continues to exceed the growth in demand, leading to oversupply.

Find out more…

Market Analytics: Methanol – 2024

This report provides analysis and forecasts to 2050 of supply and demand of the global methanol markets.  Methanol demand is segmented by acetic acid, DME, formaldehyde, olefins, MTBE, biodiesel, gasoline blending, marine fuel and others.  This analysis identifies the issues shaping the industry as well as provide demand, supply and net trade data for 40 countries.

Market Scenario Planning: Green Methanol - 2023

This report provides NexantECA’s scenario forecast for biomethanol and e-methanol demand to 2050 by key region and application (marine fuel, other fuel and chemical derivative).  Scenarios forecast demand based on low, base and high assumptions whereby underlying policy, cost learning curves and adoption of e-methanol evolve in fundamentally different ways.  As well as the scenarios, detail on the current situation of the market and key market drivers are provided.  Scenarios are defined as low, base and high and are informed by NexantECA’s expert knowledge of petrochemical markets.

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